Forexpros – Copper futures rose to a three-week high in the first trading session of 2012 on Tuesday, amid speculation demand from top consumer China will increase after data pointed to an improvement in Chinese manufacturing activity.
On the Comex division of the New York Mercantile Exchange, copper futures for March delivery traded at USD3.486 a pound during European morning trade, rallying 1.55%.
It earlier rose by as much as 1.85% to trade at USD3.524 a pound, the highest since December 12.
Trading on the Comex and the London Metals Exchange remained closed on Monday due to the New Year’s holiday.
Copper prices strengthened after official data released Sunday showed that an index of Chinese manufacturing activity rose to 50.3 in December from 49.0 in November, indicating a return to expansionary territory.
The report helped ease fears that the world’s second-largest economy could slow sharply and hurt copper demand.
Meanwhile, prices drew additional support from a broadly weaker U.S. dollar. The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, retreated 0.66% to trade at 79.75.
A weaker dollar boosts demand for raw materials as an alternative investment and makes dollar-priced commodities cheaper for holders of other currencies.
Investors were eyeing a series of important events surrounding the euro zone’s ongoing debt crisis this month, including German and French bond auctions later in the week.
French President Nicolas Sarkozy and German Chancellor Angela Merkel are also due to meet on January 9 in order to discuss new rules to enforce budget discipline across the European Union.
Europe as a region is second in global demand for the industrial metal after China and worries over its economic growth have kept prices under pressure in recent months.
After climbing to a record high USD4.657 in February, copper prices plunged to a 14-month low of USD2.994 in early October, as a deepening euro zone debt crisis and fears over a ‘hard landing’ in China pushed investors to liquidate assets such as industrial metals.
Elsewhere on the Comex, gold for February delivery jumped 1.2% to trade at USD1,589.75 a troy ounce, while silver for March delivery surged 2.05% to trade at USD28.55 a troy ounce.
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